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AB 5: Future Use of Owner Operators

In the recent case of People v. Superior Court (Cal Cartage Transportation Express, LLC), (2d Cal. App. Dist., 2020) the California appellate court considered the impact of AB 5 on the use of independent owner-operators in the trucking industry.

Significantly, the court stated – “… the ABC test does not mandate the use of employees for any business or hiring entity.”  The court further opined that the fact that some owner-operators … “may be incorrectly misclassified, does not mean the ABC test prohibits motor carriers from using independent contractors.”  The court referred to the business-to-business exception stating … “the ABC test does not apply to business-to-business contracting relationships, including contracts between licensed motor carriers and independent owner-operators who may operate as sole proprietorships, LLC’s, or other business entities.”

This opinion opens the door under AB 5 to the use of owner-operators through the 49 CFR lease arrangement that has been historically used by carriers in the past.  The court’s findings make much sense as most owner-operator drivers really want to be independent contractors.

A Writ of Certiorari was filed as of April 13, 2021, to obtain a review of this decision from the California Supreme Court.  We will report any future decisions in this regard. Should you have any questions regarding transportation law, please do not hesitate to contact us.


This material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute legal advice.  For information on your particular circumstances, please contact Chauvel & Glatt at 650-573-9500. (photo credit: 123rf.com)




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